Last weeks 25% rise in natural gas price is sure to produce more reluctance to grow fertilizer hungry crops such as wheat next year! The AWB is focussed on exporting a commodity that will be unprofitable to grow in a future with expensive oil and gas. Farmers are swinging in droves to legumes crops that require no nitrogen fertilizer inputs! Corn to soy in summer cropping areas and wheat to lupins/peas in winter cropping areas. Watch the price of meat (which is a concentration of the costs of growing grain!) spiral over the course of the next year!
------------------------------------------------------------- Fertilizer prices also will pinch farmers
NORTH PLATTE (AP) - Even as farmers are budgeting for high fuel prices, many are bracing for a spike in fertilizer costs, too.
Joseph Fung is a market analyst for Mosaic Co., a producer and marketer of concentrated phosphorus and potash crop nutrients, who spoke this week at the Nebraska Agri-business Association's summer convention in North Platte.
He acknowledged that a 30 percent jump in natural gas and nitrogen prices in the last three weeks have pushed fertilizer prices to about double what they were a year ago.
While he predicted nitrogen prices will level out, potash and phosphate continue their rise.
The nitrogen fertilizer industry is the most sensitive to natural gas price hikes, as gas makes up 80 percent of the cost of the ammonia used to make nitrogen fertilizer, Fung said.
Availability of products will be tight for producers, he added, and the only option is to watch domestic and international markets.
"We are affected by overseas, and their demand and supply," he said. "Potash is Canadian supply. Phosphate is the relationship between Brazil not buying and Asia buying more. Nitrogen is all natural gas prices."
The long-term supply and demand will adjust accordingly in the future, and relief in nitrogen prices should show up in the next six to 12 months, he said.
Government reports show costs to produce nitrogen fertilizer jumped from just over $80 per ton in the 1990s to more than $300 a ton last year. As a result, nearly 30 percent of nitrogen fertilizer production has moved overseas.
American farmers now rely on countries such as Saudi Arabia, Qatar and Venezuela to produce their fertilizer.
Keeping a lid on fertilizer and other expenses becomes more important to Nebraska farmers each year.
Last year, for example, Nebraska's farm production expenditures were up 7.3 percent, to $9.88 billion dollars, the U.S. Department of Agriculture said last month.
Expenditures per farm or ranch in Nebraska averaged $204,555 last year, up from $189,897 the year before, the USDA's Nebraska Agricultural Statistics Service said. Nebraska's average expenditures were more than twice the national average.
Livestock expenses accounted for 19 percent of Nebraska's total production expenditure, while feed, which can be grains, soybean or anything to feed livestock, was 15.6 percent. Rent was 12.1 percent and farm services were 9 percent.
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